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4th Circuit Considers Whether Individual Mandate Unconstitutional

RICHMOND, Va. - (Mealey's) The federal government argued before a panel of the Fourth Circuit U.S. Court of Appeals on May 10 that a district court judge erred in finding that the individual mandate contained in the Patient Protection and Affordable Care Act (PPACA) is unconstitutional, while the Commonwealth of Virginia urged the court to find that the individual mandate cannot be severed from the rest of the act, so the entire thing must be declared unconstitutional (Commonwealth of Virginia v. Kathleen Sebelius, Nos. 11-1057 & 11-1058, 4th Cir.).

On Dec. 13, U.S. Judge Henry E. Hudson of the Eastern District of Virginia held that by enacting the individual mandate provision, Congress exceeded the powers granted to it under the Constitution. He severed the provision from the rest of the act.

In the case, Virginia Attorney General Kenneth T. Cuccinelli sued Health and Human Services Secretary Kathleen Sebelius, in her official capacity, alleging that the PPACA conflicts with Virginia Code Section 38.2-3430.1:1 and that a main provision of the PPACA requiring that most Americans without insurance obtain coverage or face a penalty is unconstitutional.

The parties separately appealed the ruling to the Fourth Circuit. Sebelius appealed from the order granting summary judgment in part to Virginia and denying her summary judgment and dismissal motions. Virginia appealed aspects of the order pertaining to severance, scope of severance and remedy.

Arguing for the government, U.S. Acting Solicitor General Neal Kumar Katyal said the District Court erred in getting to the merits of the case because Virginia lacked standing to even bring the case. The U.S Supreme Court has clearly held that the proper way to get standing is limited, and allowing a lawsuit such as Virginia's injects states into federal court in political disputes that are best handled outside the courtroom, Katyal said.

In response to questioning, Katyal said the bottom line is that unless a state's sovereign interest has been affected, it can't do anything under parens patriae standing.

The judges did ask about the merits of the case, to which Katyal replied that the question is not whether the purchase of health care insurance is an activity or nonactivity but whether there is a substantial effect on interstate commerce.

The court need not get into whether the government can compel a purchase of a good when that good is being purchased every day across the country, Katyal said. The question is one of financing and how can the government regulate the means of paying for that good so as to avoid people from externalizing the cost of health care onto others, he said.

Solicitor General E. Duncan Getchell Jr., arguing for Virginia, said sovereign standing arises from a state's code of laws; however, it is affected. The state's law does create standing, but it also does other things, Getchell said.

In response to questioning, Getchell said a state should be able to create standing to challenge a federal statute by first passing a law that disagrees with that federal statute. The flip side would be that the state could never sue, he added.

Judges Diana Gribbon Motz, Andre M. Davis and James A. Wynn Jr. were randomly assigned to the case by a computer program.

[Editor's Note: Full coverage will be in the May 28, 2011, issue of Mealey's Managed Care Liability Report. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]